Transforming growth factor β (TGFβ) is one of few known negative regulators of hematopoiesis, yet the mechanisms by which it affects cell cycle arrest and stem cell quiescence are poorly understood. Induction of the cyclin-dependent kinase inhibitors, p15INK4b (p15) and p21WAF1 (p21) is important for TGFβ-mediated cytostasis in epithelial cells but not in hematopoietic cells. Using primary human hematopoietic cells and microarray analysis, we identified p57KIP2 (p57) as the only cyclin-dependent kinase inhibitor induced by TGFβ. Up-regulation of p57 mRNA and protein occurs before TGFβ-induced G₁ cell cycle arrest, requires transcription, and is mediated via a highly conserved region of the proximal p57 promoter. The up-regulation of p57 is essential for TGFβ-induced cell cycle arrest in these cells, because two different small interfering RNAs that prevent p57 up-regulation block the cytostatic effects of TGFβ on human hematopoietic cells. Reduction of basal p57 expression by this approach also allows hematopoietic cells to proliferate more readily in the absence of TGFβ. p57 is a putative tumor suppressor gene whose expression is frequently silenced by promoter hypermethylation in hematologic malignancies. Our studies identify a molecular pathway by which TGFβ mediates its cytostatic effects on human hematopoietic cells and suggests an explanation for the frequent silencing of p57 expression.